Public transport is ok but not perfect. You will significantly limit your options, particularly once you get out of the cities if you aren't willing to drive.

My suggestion minimize the driving in the cities (that where the driving is hardest). You won't need a car for Edinburgh, Stirling and Inverness and public transport should get you between them without too many problems.

Pickup a car in Inverness - its pretty rural up there so the driving won't be too bad and this is the only way you are going to get out into the more remote parts of the highlands. Bite the bullet and pay the extra for an automatic (one less thing to worry about) and full deductible just in case. Take your GPS (make sure it covers Europe) the driving won't be too bad. My tip, remember the driver should never be in the gutter. Its amazing how many people forget about whether they are supposed to be on the left or right but everyone can remember they are supposed to be in the middle as the driver! Only time this fails is if you take a UK across to Europe! If you decide against the car, work out how much the car would cost and be willing to pay this. Given how much your paying for the flights, hotels etc theres no point in skimping on cars.

One option to consider during the festival is the University Halls of Resident. With the students out I know Edinburgh Uni use to let the student rooms. Not exactly 5 star but the goal isn't to spend time in your room anyway.

Make sure you get down into the grass market while you are in Edinburgh. Lots of speciality shops and pubs.

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